Industry disruptions and economic downturns are nothing new, though the unprecedented upheaval of the past few years has changed how we think about work and job stability. Though the rate of inflation has slowed, the U.S. economy continues to teeter on the edge of recession, leading to projected “significant job losses” for 2023. Large scale job cuts across multiple industries at the end of 2022 have exacerbated these concerns, to the point that one in three workers says they’re concerned about layoffs.
Of course, layoffs or reductions in workforce (RIW) are devastating for those who’ve been let go, but the impacts of layoffs can be equally harmful for the remaining employees and for the organization as a whole. After a layoff your workforce can struggle to manage their stress as well as the additional work left behind by their departed coworkers. Layoffs can be challenging for leaders, managers and human resources as they work to promote wellbeing, motivation and productivity across the entire organization.
Layoffs may be unavoidable, but there are practical ways to boost employee morale after layoffs and ensure the health of your organization. Below are some recommendations for supporting your employees and proactively mitigating the disruptions that follow a reduction in workforce.
Challenges Organizations Face Following Layoffs
There are numerous challenges resulting from a reduction in workforce, but the following five are considered to be direct impacts on an organization’s employees and employment practices:
- A loss of talent and knowledge — First and foremost, the biggest impact of a RIW is the loss of your skilled employees, important resources who are not easily or quickly replaced. This is different from terminating a single employee. Layoffs affect more employees and can also include multiple departments, resulting in many parts of the organization being impacted due to the loss of creativity, innovation, expertise, skills and people to do the work.
- Low morale and weakened engagement amongst the remaining employees — Any sense of relief an employee may feel if they’re not laid off will quickly be replaced by sadness over losing friends and colleagues, stress over the situation and constant concern about the current and future health of the organization. According to Maria Parker in “Dealing with the trauma of abrupt large-scale layoffs,” any RIW is a traumatic event that triggers the neurological “flight or fight” stress response in your employees, reducing their motivation, focus, creativity and productivity. There’s also the risk of lingering survivor’s guilt from remaining employees, which can be compounded by the stress of having to pick up extra responsibilities.
- Damage to the organization’s image — Every organization holds ideals and values that guide their actions. Values unite your employees with a greater sense of purpose and engagement, attract like-minded professionals to your organization and make it an overall better place to work. If a layoff somehow goes against those values, that’s a serious blow to the integrity, trustworthiness and reputation of the organization. For example, should the organization seek to avoid confrontations by engaging in “quiet firing” techniques — that is, purposely making the workplace so difficult and toxic that certain employees feel forced to quit — that can demoralize the entire organization. A harmful RIW sends out a message to customers and future employees that your organization may not be what it purports to be, compromising customer loyalty and making future hiring more difficult.
- Risk of higher voluntary turnover — Uncertainty surrounding a RIW — in combination with lower morale, added stress and loss of trust — can push more of your valuable remaining employees to leave the organization. Layoffs that are poorly managed can disillusion your top-ranking employees, leading them to seek greater stability with other organizations (perhaps even a direct competitor). Poor communication around layoffs can completely break the trust that employees have in leadership, resulting in even lower productivity and increased turnover.
- Chance of violating state and federal regulations — Did you know that layoffs may leave you open to fines and litigation? Employees who feel mistreated or discriminated against during a RIW may file a legal claim. Federal, state and local agencies may also intervene if a layoff is found to have violated any laws or compliance requirements, such as the Worker Adjustment and Retraining Notification (WARN) Act and similar mini-WARN regulations.You’ll need to carefully consider the steps of the process, the reasons for doing so and that the RIW is above-board. Specific considerations include:
- Analyzing the selection criteria to ensure layoffs aren’t overly impacting employees of a particular age, race, gender, national origin or other protected classes.
- Ensuring you’re not opening yourself to claims of retaliation by releasing workers who’ve recently claimed sick or personal leave.
- If the workforce is unionized, ensuring that layoffs are done in accordance with the collective bargaining agreement in effect.
- Checking that you’re meeting all federal, state and local notification requirements imposed under the WARN Act.
It’s recommended to consult with your legal counsel and human resources to ensure you’re meeting all obligations and reducing your possible exposure to individual, class- or collective-action claims.
While these challenges cannot always be avoided, they can be mitigated when leadership knows how to focus on supporting the remaining employees and preserving the organization’s culture.
Ways to Support Employees Following a Layoff
Every organization, no matter how successful or how well managed, will have to confront a layoff event at some point. You can ensure that your organization is prepared by keeping these recommendations in mind:
1. Don’t just manage, lead
Leadership and management skills are complementary and one skill does not necessarily guarantee the other. During a challenging situation such as a layoff, senior staff will have to make decisions on the right steps to take and decide on the right way to implement them. No matter how uncomfortable the process may become, managers and supervisors need to be confident (and supported) in stepping up to alleviate concerns, coach positive behaviors and bring your teams together. They should know how to address your personnel as people first, and then effectively manage the corresponding roles and responsibilities. Investing in Job Relations training is a powerful way to provide your managers and supervisors with the skills and confidence to take the best course of action.
2. Provide open and clear communication
Part of that leadership is communicating openly, honestly and often about the RIW. You and all senior personnel need to be candid and open about the layoffs; you can’t afford to leave your employees in the dark and let them assume the worst. Hold all-hands sessions to discuss the situation, its context and what comes next, and encourage people to share their concerns. But don’t leave it at that — be sure to have one-on-one conversations with employees who are directly impacted and consider opening up spaces for employees who want to discuss their concerns in private.
3. Prioritize the positive
Motivating your employees will require finding positive elements to rally around. This can be challenging, especially during the layoff process. A few approaches to consider:
- Celebrate any current successes and thank people for their continued work and contributions. Showing your appreciation can help them feel valued.
- Take the opportunity to re-align to the organization’s stated goals, values and mission. Values are only truly held when they’re tested, and leadership has to rise to the challenges to demonstrate its commitment.
- Present ways that employees can continue to develop and grow in their current positions. Reshuffling responsibilities can be seen as adding more work to employees who are already stressed. Try to position new responsibilities as opportunities for professional development.
All that said, you’ll need to be mindful about how you present things — don’t provide any false assurances or misrepresent the situation. Honesty is the best policy.
4. Identify affected teams and groups
Each team is unique, and so may be affected differently by the RIW or require different levels of support to move forward. Take the time to identify which teams are most likely to be impacted and set aside time to reach out to them to reinforce unity and encourage positive team dynamics. Have some flexibility, though, as there may be unexpected fallout as people’s responsibilities are shuffled around. Measure impacts and solicit feedback over time and make additional outreach attempts as necessary.
5. Have a dialogue with your employees
Open communication means listening and responding to employee concerns during the layoff process. Employee feedback is essential, as it can highlight concerns and questions before they become problems. It’s also an efficient way to find and support brand advocates within the organization who can help motivate employees and promote additional communication. Take the opportunity to empower managers and individual contributors to re-emphasize your organization’s commitment toward its goals and mission. Feedback is also helpful in finding areas of efficiency that management may have overlooked, which can lead to other ways of cutting costs and may help reduce the impact of a layoff.
6. Look for more efficiencies
“Work smarter not harder” is a nice axiom, but how does it actually work in practice? This is where having a dialogue with your employees can motivate them and boost morale after a layoff by helping them see how to utilize their talents more efficiently. Questions to ask include:
- How can processes be changed to take some of the pressure off of the remaining employees?
- Are there any products or services that management has been overlooking which can help increase revenue?
- Is it possible to employ technology or automation to remove or reduce certain tasks?
Employing a process like Job Methods training can help to break down processes to identify the most efficient methods to get work done and allow for the best use of your employees’ talents.
7. Present a clear plan to reallocate work and responsibilities
After you have a good understanding of where greater efficiencies may lie, start the process of eliminating low-priority work so employees can focus on what matters most. Presenting a plan to move forward will increase confidence and outline important tasks to focus on, which can help to reduce stress levels while your organization completes the RIW.
8. Commit to training and reskilling
Part of the process of rebalancing workloads and moving toward efficiencies requires training and reskilling employees as needed. Job Instruction training can help quickly onboard employees to new responsibilities, build their confidence, standardize new processes and set the entire organization up for success.
9. Offer assistance to those who were let go
How you treat your released employees is a sign of how you’ll treat your remaining and future employees. Ensure you have information ready for them about last pay and benefits, including COBRA forms and any employee assistance programs (EAP). Are there resources outside of the organization that can offer additional support or provide access to resources such as mental health counseling? You can also provide assistance in finding new employment, either by coordinating with local workforce development centers or reaching out to other companies who may be hiring. Every form of assistance signals to all your employees that you have their backs.
Every organization is different, and so will face its own unique challenges when it has to layoff employees. How your team manages to get through the process will largely depend on planning, leadership and training. Conducting people-focused training programs can prepare your supervisors with the leadership and management skills to right the ship during difficult times, while reskilling and training programs can empower your employees to quickly and effectively rise to meet new challenges.
- Implementing a lean operation philosophy can help eliminate waste and cut costs, mitigating or even negating the need to conduct a RIW.
- Job Relations training teaches workers to communicate more effectively, helps them practice solving problems on the job and strengthens the working relationship between supervisors and their teams.
- Job Methods training can help your teams evaluate processes and determine whether they are using time and resources in the most efficient way possible.
Investing in training programs like those offered by TWI Institute shows that you have respect for your employees and reinforces an organizational culture of improvement. If you’d like to learn more about the training that can prepare your workforce to weather any economic storm, explore the TWI Institute’s continuous improvement programs.